Articles Published in: November 2016

November 30, 2016

Mortgage Rate Trends: Slightly Higher

Were giving additional time for mortgage rate trends this week in light of the sharply higher movement and attempts at recovery weve seen in recent days. Since our last report, mortgage rates have moved higher once more, but overall the best execution numbers are roughly about in the same range as mentioned in our last report. There are a variety of reasons for Wednesdays upward turn for rates. One factor is overseas economic news related to the OPEC deal, which in and of itself might serve to put some upward pressure on rates depending on investor reaction to those developments. However, the OPEC situation combined with domestic inflation fears related to the incoming President and his administration serves to dump more fuel on the fire. These two factors are cited | more...

Will My Home Loan Application Be Approved?

November 30, 2016

2017 Home Loans: Is Your Holiday Spending A Factor For An FHA Loan?

By Joe Wallace

Holiday credit card use tends to spike, and those considering 2017 home loans should take this into account when planning for a new mortgage loan application. Your credit card debt affects your debt-to-income ratio, which the lender will calculate at application time. That ratio, called DTI for short, is a very important factor in home loan approval. For some borrowers, the amount of credit card debt, even holiday spending, isnt as much of a problem as timely payments. Some consumers are tempted at holiday time to skip payments in order to free up some much-needed cash, but a missed payment within 12 months of your FHA mortgage or refinance loan application is not a good thing. Financial experts recommend borrowers maintain on-time payments with no late or missed payments for | more...

November 29, 2016

Mortgage Rates: Recovering

By Joe Wallace

Since our last report on mortgage loan interest rate trends, we saw 30-year fixed rate conventional mortgage rates hit 4.25% best execution (depending on the lender). That was something of a milestone in 2016 after many, many months of sub-four percent mortgage rates. But since that time, rates have recovered some lost ground and while the current best execution rates are still above the four percent mark, any news of lower rates at this point is welcome. 30-year fixed rate conventional mortgages are, at the time of this writing, reported at a best execution range between 4.125% and 4.25% depending on the lender. FHA mortgage loan rates are still within a range between 3.75% and 4.0%, best execution. As we always point out, the rates seen here are listed assuming | more...

How much can I borrow with an FHA refinance loan?

November 29, 2016

FHA Loans Closing Checklist

By Joe Wallace

Borrowers who buy a home with an FHA loans or any other type of home loan, learn that their closing dates and other details become very important the closer the borrower comes to signing on the dotted line and taking possession of the home. To help borrowers manage all the details about closing, federal law requires the loan officer to provide a closing disclosure that details expenses, fees, and other information. The government’s watchdog agency, the Consumer Financial Protection Bureau (CFPB) at ConsumerFinance.gov says of this disclosure, “Lenders are required to provide your Closing Disclosure three business days before your scheduled closing. Use these days wisely”. The three day period before you close should be used to review your closing details-use it like a closing checklist to make sure everything | more...

November 28, 2016

The Debt To Income Ratio: FHA Rules In 2017

By Joe Wallace

If you are thinking about your FHA loan options in 2017, one area to pay special attention to (especially over the holidays) is your debt to income ratio (DTI). This ratio is one of the most important factors in the lender’s decision to approve or deny a home loan-it can be just as crucial as your FICO scores. The debt to income ratio is a calculation your lender will make by taking the amount of verifiable income you have and comparing it with the amount of your monthly financial obligations. This ratio is calculated with and without your proposed mortgage payment in order to determine if you can afford the loan payments every month. How does the lender make these calculations? According to HUD 4000.1, pages 177 and 178: “The | more...

November 25, 2016

203(k) Rehab Loans In 2017: Maximum Mortgage Amounts

By Joe Wallace

FHA 203(k) rehab loans and 203(k) refinance loans in 2017 will help qualified borrowers buy and improve property in need of repairs, renovation, etc. The FHA 203(k) rehab loan program allows a borrower to fill out an application purchase a “fixer-upper” or improve a property. Here’s what the FHA official site says about this type of FHA mortgage: “Section 203(k) insurance enables homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgageor to finance the rehabilitation of their existing home.” There’s both a standard 203(k) and a limited FHA 203(k) loan for smaller projects. But how does the lender calculate the amount of the 203(k) mortgage or refinance loan? HUD 4000.1 addresses how the maximum mortgage amount | more...

November 25, 2016

FHA Appraisal Fees in 2017

By Joe Wallace

If you are considering an FHA home loan in 2017, the FHA appraisal fees and other appraisal issues are likely something you’ll be thinking about soon. Planning and budgeting for a home loan includes anticipating FHA appraisal fees, hazard insurance, and required closing costs that won’t be included in the loan amount. Do you know how much to save up for such expenses? We get many questions about FHA appraisals in our comments section. One common question has to do with the specific amount of the fee and how such fees are determined. We are also asked about refunds of the appraisal cost if the home is ultimately declared unsuitable for an FHA mortgage, or if the borrower chooses not to purchase the property for some reason. The key to | more...

November 24, 2016

Happy Thanksgiving 2016

By Joe Wallace

Happy Thanksgiving! We pause from our usual schedule of writing about FHA home loans and answering reader questions to observe the holiday. Thank you very much for reading! Our regular schedule returns on Friday.

November 23, 2016

FHA 203 (k) Loans in 2017: What To Expect

By Joe Wallace

Are you considering an FHA 203(k) rehab loan or refinance loan in 2017? There are rules for this fixer upper loan (and its refinance loan counterpart) you should know going into the process. For starters, when a borrower is applying for an FHA 203(k) loan, the lender is required to use a 203(k) consultant. According to HUD 4000.1, “The Mortgagee must select an FHA-approved 203(k) Consultant from the FHA 203(k) Consultant Roster in FHAC…The Consultant must inspect the Property and prepare the Work Write-Up and Cost Estimate.” This section of the loan rules adds definitions for the terms mentioned above. “The Work Write-Up refers to the report prepared by a 203(k) Consultant that identifies each Work Item to be performed and the specifications for completion of the repair. Cost Estimate | more...

November 23, 2016

FHA 203(k) Loan Rules: A Reader Question

By Joe Wallace

A reader asks, “I’m attempting to buy a mixed use residential/commercial property through an FHA 203(k) loan, and the building meets the size requirements. The commercial section is drywalled and spackled with plywood flooring. The residential section is in compliance, but the FHA appraiser listed a bunch of things needed in the commercial section, like a washroom, finished flooring, and baseboard.” “Where did they come up with this list? Is this a requirement for getting the loan? Ill have to make the seller do these things before the sale since I cant do any 203k work on the commercial section, so how do I know what is expected in the commercial section? The HUD doc says nothing on this.” FHA 203(k) loans are also known as “fixer-upper” loans, but even | more...